Average Annual Premiums for Family Health Benefits Increase Nine Percent

After several years of relatively modest premium increases, annual premiums for employer-sponsored family health coverage increased to $15,073 this year. This is a 9% increase from last year, according to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey. On average, workers pay $4,129 and employers pay $10,944 toward those annual premiums.

“This year’s 9% increase in premiums is especially painful for workers and employers struggling through a weak recovery,” Drew Altman, PhD, Kaiser president and chief executive officer said in the press release.

The annual survey of small and large employers provides a detailed picture of trends in private health insurance costs and coverage. This year’s survey also looked at employers’ experiences with several already implemented provisions of the 2010 health reform law affecting employer coverage.

Premiums increased significantly faster than workers’ wages (2.1%) and general inflation (3.2%). Since 2001, family premiums have increased 113% compared with 34% for workers’ wages and 27% for inflation.

According to Maulik Joshi, DPH, president of the Health Research & Educational Trust and senior vice president for research at the American Hospital Association, survey findings related to the impact of early provisions in health reform provide valuable insight for employers, providers, consumers and policymakers as they prepare for additional provisions to take effect by 2014.

The survey estimated that employers added 2.3 million young adults to their parents’ family health insurance policies as a result of the health reform provision that allows young adults up to age 26 years without employer coverage on their own to be covered as dependents on their parents’ plan. Young adults historically are more likely to be uninsured than any other age group.

“The law is helping millions of young adults to obtain health coverage,” Gary Claxton, a Kaiser vice president and co-executive director of the Kaiser Initiative on Health Reform and Private Insurance, stated in the release. “In the past, many of these young adults would have lost coverage when they left home or graduated college.”

The study also finds 31% of covered workers are in high-deductible health plans, facing deductibles for single coverage of at least $1,000, including 12% facing deductibles of at least $2,000. Covered workers in smaller firms of 3 to 199 employees are more likely to face such high deductibles, with half of workers in smaller firms facing deductibles of at least $1,000, including 28% facing deductibles of $2,000 or more.

These numbers in part reflect the rise of consumer-driven plans, which are high-deductible plans that include a tax-preferred savings options such as a Health Savings Account or Health Reimbursement Arrangement. During the past 2 years, more firms have started to offer these plans, and the share of covered workers enrolled in this type of plan has increased from 8% in 2009 to 17% in 2011. Plans that can be used with a Health Savings Account have lower premiums than other plan types, but must have annual deductibles of at least $1,200 for an individual and $2,400 for a family this year.

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